Fewer people are watching television these days, and yet advertising on TV keeps getting more expensive. What's up?
What's up is the fact that there are so many media sites these days; audiences are splitting up. Instead of everyone settling down to watch television after supper, everyone's doing their own thing: Facebook, YouTube, Hulu, email, television, Pandora, Twitter, you name it. As a result, TV audiences are getting smaller every year.
However, all this segmentation makes television about the only place an advertiser can reach millions of people at one shot. It has what media buyers call "reach" that's unmatched elsewhere.
Alex Feldman, a manager of global forecasting for Magnaglobal, a unit of the Interpublic Group (my former employer), put it this way in the Wall Street Journal: "Advertisers are paying more for lower ratings; still, it is the best thing out there." Advertisers are expected to spend $174 billion this year, and the percentage spent on TV keeps rising.
More confusing is the fact that while Internet usage is growing, Yahoo and and AOL are barely treading water.
In addition, according to the WSJ, "People are spending as much time on their mobile phones as reading newspapers and magazines combined, yet the mobile-ad industry is a fraction of the print-ad market." They attribute that to the laws of supply and demand. "Those laws are increasingly pulling ad dollars toward two poles, TV and the Internet."
It seems TV and the Internet are good at different things. TV at getting you to want something, and the Internet at taking your order. Much more research needs to be done. What's the role of social media in all of this, for example, and how can an ad on Google actually persuade people to prefer, say, a Ford Fusion over a Toyota Camry?
In the meantime, there will always be a need for savvy people to create the advertising, and some super-savvy media people to figure this all out.